Why chief marketing officers should lead brand owners’ boardroom conversation – Comment

In beverage alcohol, everybody’s chasing growth at a tough time, what with the industry currently beset by challenges including high costs, lower yields from raw materials and the rise in sober-curious consumers turning from alcohol to no & low options.

However, the industry response – a blinkered focus on acquisitions and buying a way into new markets ­- is way off the mark.

For proof, consider the recent speculation around a potential Diageo sale when the spirits giant posted its first full-year sales decline (-0.6%) since 2020 in July, driving shares down more than 9% to a four-year low. Then, ponder Carlsberg’s agreed bid to buy Britvic for GBP3.3bn (US$4.23bn) to drive growth through the creation of a “UK powerhouse”. 

Both developments demonstrate that when it comes to growth, the industry is currently short on ideas. That’s because purchasing market share isn’t the best way to boost a brand – and that’s because marketing can be a much more effective strategy.

Despite this, brand owners aren’t turning to advertising to increase their market share, customer base and overall business revenues. The reason for this? I believe it’s because of the ongoing lack of CMOs in the C-suite and at board level.

It’s a story told in stats. Nine in ten CEOs believe the role of marketing is well-defined and when it comes to understanding modern marketing, 50% of CEOs feel comfortable with it, according to research by McKinsey. 

Yet a staggering 66% of CMOs believe CEOs don’t comprehend it.

This disconnect, paired with a lack of marketing experience among Fortune 250 CEOs – just 10% have marketing backgrounds – demonstrates an underestimation of marketing’s wider business-driving potential, the same report shows. Worse still, only 2.6% of board members from S&P 1500 firms had executive-level marketing experience (over a six-year period), according to research published in the US Journal of Marketing.

Meanwhile, a separate study by Deloitte found that just 26% of CMOs regularly attend board meetings.

While other sectors have long recognised the power of marketing to grow brands, many in alcohol still perceive advertising as little more than a fluffy add-on rather than a powerful growth driver.

In commoditised industries such as energy, businesses understand the power of branding to differentiate and grow share. Earlier this year, for instance, Octopus Energy became the UK’s largest energy supplier just eight years since launching, thanks to its investment in brand-building. Meanwhile, in travel, Airbnb’s decision to move its spend into brand-building returned the brand to profit. Pre-pandemic, the company’s marketing strategy was mostly performance driven, but a switch to big brand campaigns – with a focus on upscaling education – boosted both direct bookings and retention, and delivered the travel accommodation company’s most profitable fourth quarter (year-on-year sales jumped by 24%).

Anheuser-Busch InBev leads the way in the drinks industry, with its investment in marketing as a growth driver resulting in its beer brands becoming the most valuable in the world. Corona, for example, is the most valuable beer brand globally, according to Kantar’s recent BrandZ rankings, following a 40% brand value increase that exceeds US$19bn.

Other AB InBev brands in the top ten are Budweiser, which came in second; Modelo in fourth; Brahma, fifth; Michelob Ultra, sixth; Bud Light, seventh; Skol, eighth, and Stella Artois in tenth.

With a focus on creative excellence to power sustainable business growth – which earned the group the title ‘Creative Marketer of the Year’ at Cannes Lions in 2023 for the second consecutive year – AB InBev is an exception among drinks multinationals, however, not the norm.

How do drinks marketers get a place at the top table? The answer, says Kimberly Whitler, Frank M Sands senior associate professor of business administration at the University of Virginia’s Darden School of Business, is to have the aspiration to become a CEO.

In a recent Forbes article, she identified several traits that are common in CMOs who move on to become CEOs. These include a commitment to leveraging marketing as a P&L function (as opposed to a staff function that serves the firm’s P&L function) and operating in highly competitive markets (providing a more challenging environment to learn how to engineer growth).

Also on Whitler’s list is having a sustained track record over time for developing marketing talent and ensuring enterprise-wide learning and leadership.

As economic pressures increase, drinks industry CMOs urgently need to be leading the boardroom conversation. Now is the time for them to step up – and for CEOs to wake up, acknowledge the case for growth-driven marketing and act on it.